Test bank for financial ACCT2 2nd edition by godwin

an increase in the financing activities section of the statement of cash flows.. Statement of Retained Earnings at December 31, 2012 Which financial statement would you analyze to determ

Test Bank for Financial ACCT2 2nd Edition by Godwin

Which of the following underlying assumptions for the conceptual framework

is the reason the dollar is used in the preparation of financial

Which of the following is an assumption made in the preparation of the

4 Financial statements are prepared assuming that inflation has a distinct effect

on the monetary unit

The time period assumption is necessary because:

1 inflation exists and causes confusing swings in financial statement amounts over time

2 external users of financial statements want accurately-reported net income for a specific period of time

3 financial statements users expect full disclosure of all events throughout the entire time period translated in dollars

4 it is required by the federal government

The going concern assumption is concerned with:

1 the company's ability to continue operations long enough to carry out its existing obligations

2 any information that is capable of influencing the decisions of anyone using the financial statements

3 measuring ongoing business activities at their exchange price at the time of the initial external transaction

4 offsetting management's natural optimism by providing a prudent approach

to uncertainty in financial statement items

Which of the following concepts relates to separating the reporting of

business and personal economic transactions?

1 Cost principle

2 Monetary unit assumption

3 Economic entity assumption

4 Objectivity assumption

"Revenues" are best described as:

1 decreases in resources resulting from the purchase of goods for the provision

of services

2 increases in resources resulting from the sale of goods or the provision of services

3 assets used or consumed in the sale of products or services

4 an increase in the financing activities section of the statement of cash flows

Which of the following best describes the term "expenses"?

1 The cost of assets used in the investing activities of a business

2 The amount of interest or claim that the owners have in the business

3 The future economic resources of a business entity

4 A decrease in resources resulting from the sale of goods or provision of

services

Which statement demonstrates the financial success or failure of the

company over that specific period of time?

1 Statement of changes in stockholders’ equity

2 Statement of retained earnings

1 Balance Sheet for the Year Ended June 30, 2012

2 Statement of Retained Earnings as of December 31, 2012

3 Income Statement for the Year Ending December 31, 2012

4 Statement of Retained Earnings at December 31, 2012

Which financial statement would you analyze to determine its operating performance for the past year?

Doughtry's Pet Shop reported a net loss of $1,500,000 and total expenses of

$2,900,000 How much were the total sales?

The income statement shows:

1 how much profit the company has earned since it began operations

2 net income equal to the amount of cash on the balance sheet

3 a summary of the results of operations for a period of time

4 the liquidity of the company on an annual basis

Expenses can be matched against revenues:

1 if the earnings process is not complete

2 when cash is collected from the sale of products

3 in the same period as the revenue that it helped to generate

4 when payment is made for costs related to revenue

What does the phrase, "Revenue is recognized when earned" mean?

1 Revenue is recorded in the accounting records when the goods are received from a supplier, and reported on the income statement when sold to the customer

2 Revenue is recorded in the accounting records and reported on the income statement when the cash is received from the customer

3 Revenue is recorded in the accounting records when the goods are sold to a customer, and reported on the income statement when the cash payment is received from the customer

4 Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer

"Matching principle" is best described as:

1 the principle that a revenue should be recorded when a resource has been earned

2 an increase in resources resulting from the sale of goods or the provision of services

3 the principle that expenses should be recorded in the period resources are used to generate revenues

4 an increase in the financing activities

Monaco Lawn Service Company used $250 of fuel to mow customer lawns in June The fuel was purchased on account and due in July Fuel Expense should

Monaco Lawn Service Company creates revenue each time:

1 it is scheduled for service

2 amount is paid in full

3 a lawn is mowed

4 money is received in advance

IPOD CORPORATION IPOD Corporations' end-of-year Balance Sheet consisted

of the following amounts Cash $ 180,000Accounts receivable $700,000

Property, plant & equipment 950,000Long-term debt 600,000 Capital stock 1,000,000Accounts payable 350,000 Retained earnings ?Inventory 540,000 Refer to the information provided above for IPOD Corporation.What amount should IPOD report on its balance sheet for total assets?

1 $1,420,000

2 $1,830,000

3 $2,370,000

4 $2,190,000

IPOD CORPORATION IPOD Corporations' end-of-year Balance Sheet consisted

of the following amounts Cash $ 180,000Accounts receivable $700,000

Property, plant & equipment 950,000Long-term debt 600,000 Capital stock 1,000,000Accounts payable 350,000 Retained earnings ?Inventory 540,000 Refer to the information provided above for IPOD Corporation What is IPOD’s retained earnings balance at the end of the current year?

1 $ 420,000

2 $1,420,000

3 $1,950,000

4 $2,370,000

Peck Company The Peck Company reported the following items on its financial statements for the year ending December 31, 2012 Sales $1,560,000Cost of sales $1,400,000 Selling, general and Other expense 30,000 administrative expense 40,000 Dividends 10,000Income tax expense 25,000 Refer to the information provided above for Peck Company The Income Statement of Peck will report net income for the current year in the amount of:

1 $ 21,000

2 $ 26,000

3 $106,000

4 $214,000

Ponzi Corporation Ponzi Corporation reported the following information for the year ended December 31, 2012 Net income $100,000 Dividends 6,000 Retained earnings at December 31, 2012 $120,000 Refer to the information provided above for Ponzi Corporation What was the economic effect of the payment of Ponzi's dividends?

1 The dividend reduced net income for 2012

2 The dividend should be added to net income if the company's accounting equation is in balance

3 The dividend reduced total retained earnings

4 The dividends must be paid whenever Ponzi Corporation reports net income

Which of the following terms best describes a distribution of the net income

of a corporation to its owners?

4 Statement of cash flows

Which financial statement would you refer to in order to determine how many resources (assets) the company owns?

1 Balance sheet

2 Statement of retained earnings

3 Income statement

4 Statement of cash flows

Which one of the following events creates a liability for a business?

1 An obligation to pay for goods purchased on credit from a supplier

2 Inventories purchased for cash

3 Amounts invested by the owners

4 Stock sold to the general public

Which of the following is a correct fundamental accounting equation?

1 Assets + Liabilities = Equity

2 Assets + Retained Earnings = Equity

3 Assets + Equity = Liabilities

4 Assets = Liabilities + Equity

On January 1, 2012, Blackstone Company reported assets of $1,000,000 and liabilities of $600,000 During 2012 assets decreased by $200,000 and Equity decreased $250,000 What is the amount of Equity on December 31,

Who among the following invest funds into a business and are considered owners?

4 Statement of cash flows

Ranger Company has assets of $5,000,000, liabilities of $3,000,000, and retained earnings of $1,200,000 How much is total equity?

2 statement of retained earnings.

3 statement of cash flows

How is the balance sheet linked to the other financial statements?

1 The amount of retained earnings is reported on the balance sheet as a

liability

2 Retained earnings is added to total assets and reported on the balance sheet

3 Retained earnings from the statement of retained earnings is reported on the balance sheet

4 There is no link between the balance sheet and other statements, as each contains different accounts and provides different information

Which of the following best describes the term "retained earnings" of a

company?

1 The amount of total profits earned by a company since it began operations

2 The amount of claim that the owners have on the assets of the company

3 The future economic resources of a company

4 The accumulated net income of a company that has not been distributed to owners in the form of dividends

Which one of the following equations represents the statement of retained earnings activity?

1 Beginning retained earnings + net income + dividends = ending retained earnings

2 Beginning retained earnings + cash inflows 0 cash outflows = ending

Four financial statements are usually prepared for a business The statement

of cash flows is usually prepared last The retained earnings statement (RE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement In what order are these three statements prepared?

December 31, 2012 450,000 Refer to the selected information provided for Bailout Corporation How much was paid out in dividends in 2012?

1 $ 250,000

2 $2,500,000

3 $1,500,000

4 $ 350,000

On January 1, 2012, Money Company's balance in retained earnings was

$10,000,000 At the end of the year, December 31, 2012, the balance in retained earnings was $9,400,000 During 2012, the company earned net income of $440,000 How much were dividends?

1 Financing, investing, and operating

2 Cash, credit, and noncash

3 Financing, credit, and operating

4 Financing, management, and operating

Which one of the following is not one of the three business activities as shown in statement of cash flows?

1 Financing

2 Operating

3 Investing

4 Measuring

Which one of the following is not one of the activities on the statement of cash flows?

1 Operating activities

2 Investing activities

3 Business activities

4 Financing activities

Which of the following best describes a company's operating activities?

1 Operating activities are cash flows directly related to earning income

2 Operating activities are necessary to provide the money to start a business

3 Operating activities are needed to provide the valuable assets required to run

a business

4 Operating activities represent the right to receive a benefit in the future

If stockholders want to know how money flowed into and out of the company, what financial statement would they use?

1 Income statement

2 Statement of cash flows

3 Balance sheet

4 Statement of retained earnings

Cash investments made by stockholders in exchange for capital stock in a business are reported on the statement of cash flows in the:

1 financing activities section

2 investing activities section.

3 operating activities section

2 Cash flows provided (used) by operating activities + / - cash flows provided (used) by investing activities + / - cash flows provided (used) by business activities = net increase (decrease) in cash

3 Cash flows provided (used) by operating activities + / - cash flows provided (used) by financing activities + / - net change in working capital = net increase (decrease) in cash

4 Cash flows provided (used) by operating activities + / - cash flows provided (used) by investing activities + / - cash flows provided (used) by financing activities = net increase (decrease) in cash

Cash received from customers for mowing their lawns is reported on the statement of cash flows in the:

1 financing activities section

2 investing activities section

3 operating activities section

2 investing activities section.

3 operating activities section

4 supplemental section

Which one of the following financial statements shows the end of the year cash balance for a business entity?

1 Income statement and statement of retained earnings

2 Balance sheet and statement of cash flows

3 Statement of retained earnings and statement of cash flows

4 Balance sheet and statement of retained earnings

Tarp Corporation Beginning retained earnings $550,000 Ending retained earnings 700,000 Dividends paid 100,000 Revenue 525,000 Refer to the selected information provided for Tarp Corporation What is the net income for Tarp Corporation?

1 $100,000

2 $150,000

3 $450,000.

4 $275,000

If a company has $10,500,000 of revenues, declares and pays $550,000 in dividends, and has net income of $1,600,000, how much were expenses for the year?

1 $8,350,000

2 $1,050,000

3 $2,150,000

4 $8,900,000

Davis Construction Inc Davis Construction began operation on January 1,

2012, with an initial investment of $100,000 from each of its three

stockholders During the year ending 2012 Davis Construction had net income

of $125,000 and paid dividends of $50,000 Refer to the information provided for Davis Construction, Inc and calculate its retained earnings balance at December 31, 2012

1 $175,000

2 $ 75,000

3 $150,000

4 $275,000

Davis Construction Inc Davis Construction began operation on January 1,

2012, with an initial investment of $100,000 from each of its three

stockholders During the year ending 2012 Davis Construction had net income

of $125,000 and paid dividends of $50,000 Refer to the information provided for Davis Construction, Inc The dividends for the year:

1 increases the amount of capital stock reported by the company

2 are part of Davis Construction's operating expense.

3 are reported on the statement of retained earnings

4 are reported on the income statement

Davis Construction Inc Davis Construction began operation on January 1,

2012, with an initial investment of $100,000 from each of its three

stockholders During the year ending 2012 Davis Construction had net income

of $125,000 and paid dividends of $50,000 Refer to Davis Construction If Davis Construction's revenues were $500,000 for the year ended December

31, 2012, how much were total expenses?

4 both relevant and reliable

Which of the following qualitative characteristic of useful accounting

information implies that only items that meet or exceed certain thresholds will affect decisions?

1 Conservatism

2 Materiality

3 Relevance

4 Comparability

The principle of conservatism is concerned with:

1 the avoidance of overstating assets or income in the preparation of financial statements

2 the minimization of costs associated with providing financial information

3 the company's ability to carry out its existing commitments

4 the company's procedures for recording activities at their initial exchange price

Mullins, Inc manufactures furniture Mullins has given you its most recent annual report in an effort to obtain a sizeable loan The company is very profitable and appears to have a strong financial position However, based on

a news report you saw on television last night, you are aware that Mullins is a defendant in a class action lawsuit related to defective products Serious injuries were allegedly caused by Mullins' infant high chairs overturning The television news report is an example of financial information that is:

1 comparability

2 consistency